SHANGHAI-- Adidas AG is shifting production away from a Chinese supplier mired in a nearly two-week strike in a move that highlights supply-chain frailties in a country facing a rising number of labor disputes.

The German sportswear company said Thursday it is shifting some future

production from China's Yue Yuen Industrial (Holdings) Ltd. to other suppliers. Yue Yuen is in a dispute with workers over benefits that have led many of its more than 40,000 workers at a massive shoe factory in the southern city of Dongguan to go on strike.

"In order to minimize the impact on our operations, we are currently reallocating some of the future orders originally allocated to Yue Yuen Dongguan to other suppliers," an Adidas spokeswoman said, adding that the company isn't pulling out of Yue Yuen entirely.

Yue Yuen officials declined to comment on Thursday. Last week it said it had offered to make social-insurance payments at the center of worker grievances to settle the strike.

The Yue Yuen factory also makes shoes for Nike Inc. A Nike spokesman didn't respond to requests for comment. The company has said it is monitoring talks between Yue Yuen and workers.

The move by Adidas raised concerns among some striking workers, who say the company hasn't required payments in their names to social insurance and housing funds. Many are among China's more than 200 million migrant workers, largely from rural parts of the country drawn to urban areas by the prospect of higher wages.

"There is nothing we can do to stop them," said one, referring to the shift by Adidas.

"Yue Yuen and Adidas are all the same," the striker added. "What about the interests of migrant workers?"

The strike comes as China's economic growth slows and as workers ask for more and become more aware of their rights. China Labour Bulletin, a Hong Kong-based labor group, recorded 119 incidents of labor disputes in March alone. Overall, it found 202 incidents in the first quarter of 2014, up 31% from the same period last year. It cited greater social-media coverage of incidents as well as increasing on-the-ground activism.

Experts say the incident also offers a reminder that companies operating in China need to ensure that they don't have all their eggs in one basket, said Jules Falzado, a manager at Shanghai-based consulting firm SmithStreet Solutions.

Mr. Falzado said that many companies are shifting some production outside of China's traditional southern manufacturing belt. Regions such as eastern Shandong and south-central Hunan province are cheaper than in Guangdong, where Dongguan is based.

Most big multinationals have contingency plans in place, said Jim Serstad, Asia managing director for supply chain consulting firm Tompkins International in Raleigh, N.C.

Adidas said that by the end of last year it worked with 339 factories in China.

Smaller companies are often more vulnerable to labor unrest in China because they can't afford backup options, said Mr. Serstad. Last summer, the co-owner of a medical supply company was locked in his factory, held by workers who were demanding payment. The company has since folded and the co-owner lost around $6 million.

Hon Hai Precision Industry Co., which assembles gadgets for Apple Inc. and is also known as Foxconn, announced earlier this year it plans to move a small portion of its high-tech manufacturing to the U.S. Hon Hai, which employs more than a million workers in China, has been facing the challenge of rising labor costs and workplace disputes in the country.

Laurie Burkitt in Shanghai and Liyan Qi in Beijing

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